Final Results - Part 6 of 6
HSBC Hldgs PLC
26 February 2001
HSBC Hldgs PLC
NEWS RELEASE 1 PART (6) of (6)
Additional Information
1. Accounting policies
The accounting policies adopted are consistent with those
described in the 1999 Annual Report and Accounts.
In 2000, the Group adopted the provisions of Financial
Reporting Standards ('FRSs') FRS15 'Tangible fixed assets'
and FRS16 'Current tax'.
2. Dividend
The Directors have declared a second interim dividend for
2000 of US$0.285 per ordinary share, an increase of 37.7 per
cent. The dividend will be payable on 2 May 2001 to
shareholders on the Register at the close of business on 16
March 2001. The dividend will be payable in cash, in US
dollars, sterling or Hong Kong dollars, or a combination of
these currencies, at the exchange rates on 23 April 2001,
with a scrip dividend alternative. Particulars of these
arrangements will be mailed to shareholders on or about 26
March 2001, and elections will be required to be made by 20
April 2001.
The dividend payable in cash on shares held through
Euroclear France, the settlement and central depositary
system for Euronext Paris, will be converted into euros at
the exchange rate on 23 April 2001 and paid on 2 May 2001
through CCF, HSBC's paying agent.
The dividend payable to holders of American Depositary Shares
(ADSs), each of which represents five ordinary shares, will
be paid in cash in US dollars on 2 May 2001 or invested in
additional ADSs for participants in the dividend reinvestment
plan operated by the depositary.
The Company's shares will be quoted ex-dividend in London and
in Hong Kong on 14 March 2001 and in Paris on 19 March 2001.
The ADSs will be quoted ex-dividend in New York on 14 March
2001.
3. Earnings and dividends per share
Year ended 31 Dec
Figures in US$ 2000 1999
Cash earnings per share 0.81 0.66
Basic earnings per share 0.76 0.65
Diluted earnings per share 0.75 0.65
Dividends per share 0.435 0.34
Dividend pay out ratio^ 54% 52%
^ Dividends per share expressed as a percentage of cash
earnings per share.
Basic earnings per ordinary share was calculated by dividing
the earnings of US$6,628 million by the weighted average
number of ordinary shares outstanding (net of own shares
held) of 8,777 million (1999: earnings of US$5,408 million
and 8,296 million shares).
Diluted earnings per share was calculated by dividing the
basic earnings, which require no adjustment for the effects
of dilutive ordinary potential shares, by the weighted
average number of ordinary shares outstanding (net of own
shares held) plus the weighted average number of ordinary
shares that would be issued on conversion of all the dilutive
potential ordinary shares (being share options outstanding
not yet exercised) of 8,865 million (1999: 8,374 million
shares).
The cash earnings per share was calculated by dividing the
basic earnings, including the add-back of amortised goodwill,
by the weighted average number of ordinary shares
outstanding.
4. Economic profit
In 1999, HSBC enhanced its internal performance measures by
adopting economic profit, which takes into account the cost
of the capital invested in the Group by its shareholders.
HSBC prices that cost of capital internally and the
difference between that cost and cash-based earnings is the
amount of economic profit generated. Economic profit is used
by management to decide where to allocate resources so that
they will be most productive. HSBC internally emphasises the
trend in economic profit within business units rather than
the absolute amounts in order to concentrate focus on
external factors rather than measurement bases. As a result
of this, HSBC has consistently used a benchmark cost of
capital of 12.5 per cent. Given the recent changes in
interest rates, in the composition of the Group and evidence
of the improved economic conditions in Asia, we believe that
HSBC's true cost of capital is now around 10.5 per cent. We
plan to use the figure of 12.5 per cent to ensure consistency
and to help comparability.
Year ended 31 Dec Year ended 31 Dec
Figures in US$m 2000 % 1999 %
Average invested capital 43,744 34,684
Return on invested capital 7,174 16.4 5,469 15.8
Benchmark cost of capital (5,468) (12.5) (4,336) (12.5)
Economic profit 1,706 3.9 1,133 3.3
^ Return on invested capital based on cash-based earnings adjusted for
depreciation attributable to revaluation surpluses.
Average invested capital is measured as shareholders'
funds after adding back goodwill amortised and goodwill
previously written-off directly to reserves and
deducting property revaluation reserves. This measure
broadly reflects cash invested capital.
5. Acquisitions
Goodwill on the acquisition of subsidiary undertakings, joint
ventures and associates of US$9,261 million arose during
2000. Of this amount, US$9,084 million arose on the
acquisition of CCF. The contribution of acquisitions made in
2000 to operating income and operating profit was
respectively US$877 million and US$162 million.
6. Provisions against advances
Year ended 31 December
2000
Suspended
Figures in US$m Specific General Total Interest
At 1 January 2000 5,716 2,304 8,020 1,073
Amounts written off (1,811) - (1,811) (370)
Recoveries of advances
written off in prior
years 160 - 160 -
Charge/(credit) to profit
and loss account 1,212 (280) 932 -
Interest suspended during
the year - - - 689
Suspended interest
recovered - - - (291)
Exchange and other movements 818 78 896 (85)
At 31 December 2000 6,095 2,102 8,197 1,016
Total outstanding provisions
Figures in US$m At 31 Dec 2000 At 31 Dec 1999
Loans and advances to customers:
- specific provisions 6,065 5,692
- general provisions 2,102 2,304
8,167 7,996
Loans and advances to banks:
- specific provisions 30 24
Total provisions 8,197 8,020
Interest in suspense 1,016 1,073
Provisions against loans and
advances to customers
At 31 Dec 2000 At 31 Dec 1999
Total provisions to gross lending^
% %
Specific provisions 2.12 2.25
General provisions
- held against Asian risk - 0.11
- other 0.74 0.80
Total provisions 2.86 3.16
Non-performing loans and advances
Figures in US$m
Banks 23 40
Customers 10,372 10,525
Total non-performing loans and advances 10,395 10,565
Total provisions cover as a percentage of
non-performing loans and advances 78.9% 75.9%
^Net of suspended interest and reverse repo
transactions.
7. Gains on disposal of investments
Year ended Year ended
Figures in US$m 31 Dec 2000 31 Dec 1999
Gains/(losses) on disposal of:
- investment securities 324 439
- part of a business (11) 10
- associates - 3
- subsidiaries - (2)
- other participating interests (11) -
302 450
HSBC Private Equity recorded a US$61 million profit from
venture capital investment disposals (1999: US$114 million).
8. Taxation
Year ended Year ended
Figures in US$m 31 Dec 2000 31 Dec 1999
UK corporation tax charge 856 596
Overseas taxation 1,468 1,313
Deferred taxation (78) 129
Joint ventures (7) -
Associated undertakings (1) -
Total charge for taxation 2,238 2,038
Effective tax rate 22.9% 25.5%
The Company and its subsidiary undertakings in the UK
provided for UK corporation tax at 30 per cent, the rate for
the calendar year 2000 (1999: 30.25 per cent). Overseas tax
included Hong Kong profits tax of US$478 million (1999:
US$367 million) provided at the rate of 16.0 per cent (1999:
16.0 per cent) on the profits assessable in Hong Kong. Other
overseas taxation was provided for in the countries of
operation at the appropriate rates of taxation.
At 31 December 2000, there were potential future tax benefits
of approximately US$350 million (31 December 1999: US$520
million) in respect of trading losses, allowable expenditure
charged to the profit and loss account but not yet allowed
for tax and capital losses which have not been recognised
because recoverability of the potential benefits is not
considered certain.
Analysis of overall tax charge:
Figures in US$m 2000 1999
Taxation at UK corporate tax rate of
30.0% (1999: 30.25% 1998: 31.0%) 2,932 2,415
Impact of differently taxed overseas
profits in principal locations (498) (418)
(Utilised)/unrecognised tax benefits (137) 35
Other items (59) 6
2,238 2,038
9. Liabilities
Other
Figures in US$m At 31Dec00 CCF Movements At 31Dec99
Customer accounts 427,069 23,686 43,411 359,972
Deposits by banks 60,053 23,846 (1,896) 38,103
Debt securities in
issue 27,956 11,168 (16,992) 33,780
Other liabilities 104,973 12,816 (1,814) 93,971
620,051 71,516 22,709 525,826
HK SAR currency
notes in
circulation 8,193 9,905
Shareholders' funds
- to acquire CCF 9,127 9,127 0 0
- other 36,443 0 3,035 33,408
45,570 9,127 3,035 33,408
Total liabilities 673,814 569,139
Customer accounts
include:
- repos 10,485 6,470
- settlement accounts 5,441 2,997
Deposits by banks
include:
- repos 5,827 6,669
- settlement accounts 6,307 2,595
10. Reconciliation of operating profit to net cash flow from
operating activities
Year ended 31 Dec
Figures in US$m 2000 1999
Operating profit 9,447 7,409
Change in prepayments and accrued income (772) 359
Change in accruals and deferred income 1,863 249
Interest on finance leases and similar hire
purchase contracts 26 26
Interest on subordinated loan capital 1,216 826
Depreciation and amortisation 1,591 999
Amortisation of discounts and premiums (727) (112)
Provisions for bad and doubtful debts 932 2,073
Loans written off net of recoveries (1,653) (1,021)
Provisions for liabilities and charges 723 765
Provisions utilised (510) (478)
Amounts written off fixed asset investments 36 28
Net cash inflow from trading activities 12,172 11,123
Change in items in the course of collection
from other banks 656 304
Change in treasury bills and other eligible
bills (826) (2,007)
Change in loans and advances to banks 838 (5,832)
Change in loans and advances to customers (10,265) 1,126
Change in other securities (16,006) 11,293
Change in other assets (1,858) 7,669
Change in deposits by banks (2,333) (4,700)
Change in customer accounts 42,153 10,269
Change in items in the course of
transmission to other banks (1,576) 559
Change in debt securities in issue (17,019) (2,324)
Change in other liabilities^ 7,004 (4,618)
Elimination of exchange differences^^ 2,283 (1,318)
Net cash inflow from operating activities 15,223 21,544
^ The change in other liabilities excludes the creditor of
US$9,733 million at 31 December 1999 in respect of the
acquisitions of the former Republic and Safra Republic
businesses, as this was a non-operating item. The
settlement of this creditor was in January 2000 and is
recorded under 'Acquisitions and disposals' in the
Consolidated Cash Flow Statement.
^^ Adjustment to bring changes between opening and closing
balance sheet amounts to average rates. This is not done
on a line-by-line basis, as it cannot be determined
without unreasonable expense.
11. Financial instruments, contingent liabilities and
commitments
Figures in US$m At 31Dec00 At 31Dec99
Contract amounts
Contingent liabilities:
- acceptances and endorsements 5,160 4,482
- guarantees and assets pledged
as collateral security 33,968 27,319
- other 14 39
39,142 31,840
Commitments:
- documentary credits and short-term
trade-related transactions 6,513 6,310
- forward asset purchases and forward
forward deposits placed 655 487
- undrawn note issuing and revolving
underwriting facilities 302 82
- undrawn formal standby facilities,
credit lines and other commitments
to lend:
- over 1 year 36,567 33,246
- 1 year and under 138,679 128,613
182,716 168,738
Exchange rate contracts - includes
commodity, other and credit derivatives 697,229 612,403
Interest rate contracts 1,198,795 951,479
Equities contracts 44,932 33,459
The table above gives the nominal principal amounts of third
party off-balance-sheet transactions. For contingent
liabilities and commitments, the contract amount represents
the amount at risk should the contract be fully drawn upon
and the client default. The total of the contract amounts is
not representative of future liquidity requirements.
For exchange rate, interest rate and equities contracts, the
notional or contractual amounts of these instruments indicate
the nominal value of transactions outstanding at the balance
sheet date; they do not represent amounts at risk.
The increase in exchange rate, interest rate and equity
contracts since December 1999 was mainly due to the inclusion
of CCF, and to an increase in trading volumes following the
reductions which had occurred in advance of Year 2000.
12. Off-balance-sheet risk-weighted and replacement cost
amounts
Figures in US$m At 31Dec00 At 31Dec99
Risk-weighted amounts
Contingent liabilities 26,429 23,134
Commitments 18,838 17,437
Replacement cost amounts
Exchange rate contracts 12,709 9,262
Interest rate contracts 10,099 6,709
Equities contracts 2,145 2,695
Netting (8,468) (5,046)
Total 16,485 13,620
Risk-weighted amounts are assessed in accordance with the
Financial Services Authority's guidelines which implement the
1988 Basel agreement on capital adequacy and depend on the
status of the counterparty and the maturity characteristics.
Replacement cost of contracts represents the mark-to-market
assets on all third party contracts with a positive value,
ie, an asset to the HSBC Group. Replacement cost is,
therefore, a close approximation of the credit risk for these
contracts as at the balance sheet date. The actual credit
risk is measured internally and is the sum of the positive
mark-to-market value and an estimate for the future
fluctuation risk, using a future risk factor.
The rise in the replacement cost of contracts reflects the
increase in the volume of contracts and movements in market
prices.
13. Market risk
Market risk is the risk that foreign exchange rates, interest
rates, or equities and commodity prices will move and result
in gains or losses to the HSBC Group. Market risk arises on
financial instruments which are valued at current market
prices (mark-to-market basis) and those valued at cost plus
any accrued interest (accruals basis).
The Group makes markets in exchange rate, interest rate, and
equities derivative instruments, as well as in debt, equities
and other securities. Trading risks arise either from
customer-related business or from position taking.
The Group manages market risk through risk limits approved by
the Group Executive Committee. Traded Markets Development and
Risk, an independent unit within the Investment Banking and
Markets Operation, develops risk management policies and
measurement techniques, and reviews limit utilisation on a
daily basis.
Risk limits are determined for each location and, within
location, for each portfolio. Limits are set by product and
risk type with market liquidity being a principal factor in
determining the level of limits set. Only those offices with
sufficient derivative product expertise and appropriate
control systems are authorised to trade derivative products.
Limits are set using a combination of risk measurement
techniques, including position limits, sensitivity limits, as
well as value at risk (VAR) limits at a portfolio level.
Similarly, options risks are controlled through full
revaluation limits in conjunction with limits on the
underlying variables that determine each option's value.
VAR is a technique which estimates the potential losses that
could occur on risk positions taken due to movements in
market rates and prices over a specified time horizon and to
a given level of confidence.
VAR is predominantly calculated on a variance/co-variance
basis, uses historical movements in market rates and prices,
a 99 per cent confidence level, a 10-day holding period and
takes account of correlations between different markets and
rates and is calculated daily. The movement in market prices
is calculated by reference to market data from the last two
years. Aggregation of VAR from different risk types is based
upon the assumption of independence between risk types.
As at 31 December 2000, the Group's VAR includes the VAR of
the former Republic operations on a variance/co-variance
basis. However, during the year, the VAR of the former
Republic operations was calculated using a historical
simulation approach, based on the previous two years' data,
using a 99 per cent confidence interval over a 10-day holding
period; this method differs from that of the rest of the HSBC
Group and therefore this VAR is shown separately.
VAR has inherent weaknesses. It is based on statistical
models which rely on underlying assumptions and, by its
nature, cannot cover every eventuality.The Group recognises
these limitations by augmenting the VAR limits with other
position and sensitivity limit structures, as well as with
stress testing, both on individual portfolios and on a
consolidated basis. The Group's stress testing regime
provides senior management with an assessment of the impact
of extreme events on the market risk exposures of the Group.
Trading VAR for the Group at 31 December was:
Excluding former Republic operations
Maximum Minimum
Combined during during Average
Group the the for the
Figures in US$m 2000 2000 year year year 1999
Foreign
exchange
trading
positions 19.1 17.2 26.8 8.9 16.6 12.8
Interest rate
trading
positions 58.9 45.0 66.4 32.2 46.9 39.4
Equities
trading
positions 39.9 39.9 53.4 23.6 36.1 16.2^
Total trading
activities 75.0 64.8 83.7 44.5 63.1 46.1
Total trading
activities
at 31 Dec99 n/a 46.1 101.9 42.7 66.7
^ In 2000, the basis of computing equities VAR included a
refinement in respect of non-linear risk. Non-linear
risk was not a significant component of equities VAR in
1999 and it is not practicable retrospectively to amend
the comparative figure for this refinement.
Trading VAR for CCF is included in the above table from the
date of acquisition.
Trading VAR for the former Republic operations at 31 December
2000 was US$23.2 million on a variance/co-variance basis. On a
historical simulation approach, trading VAR for the former
Republic operations at 31 December 2000 was US$11.7 million (31
December 1999: US$14.5 million), the maximum during 2000 was
US$37.1 million, the minimum US$9.3 million and the average
US$18.8 million. The scope of calculation of VAR on a
historical simulation approach was refined at 30 June 2000
following a review of its basis, to be more consistent with
that of the rest of the Group. The maximum, minimum and average
on a historical simulation basis for each half year are set out
below:
Former Republic operations
Figures in US$m Total trading activities
First half Second half
2000 2000
Maximum in the half-year 37.1 19.1
Minimum in the half-year 12.5 9.3
Average for the half-year 22.7 13.6
Structural interest rate risk arises from the differing
repricing characteristics of commercial banking assets and
liabilities, including non-interest bearing liabilities such
as shareholders' funds and some current accounts. Each
operating entity assesses the structural interest rate risks
which arise in its business and either transfers such risks
to its local treasury unit for management or transfers the
risks to separate books managed by the local asset and
liability management committee ('ALCO'). Local ALCOs
regularly monitor all such interest rate risk positions,
subject to interest rate risk limits agreed with HSBC
Holdings plc. In the course of managing interest rate risk,
quantitative techniques and simulation models are used where
appropriate to identify and assess the potential net interest
income and market value effects of these interest rate
positions in different interest rate scenarios. The primary
objective of such interest rate risk management is to limit
potential adverse effects of interest rate movements on net
interest income.
HSBC has assessed its overall exposure to changes in interest
rates by calculating the approximate changes in net interest
income of HSBC's major businesses for changes in interest
rates. An immediate hypothetical 100 basis points parallel
rise or fall in all yield curves worldwide on 1 January 2001
would decrease planned net interest income for the twelve
months to 31 December 2001 by US$139 million or increase it
by US$92 million, respectively, assuming no management action
in response to these interest rate movements.
Rather than assuming that all interest rates move together,
HSBC's interest rate exposures can be grouped in blocs whose
interest rates are considered more likely to move together.
The sensitivity of net interest income for 2001 can then be
described as follows:
US Latin
dollar Sterling Asian American Euro Total Total
Figures in US$m bloc bloc bloc bloc bloc 2001 2000
Change in 2001
projected net
interest
income
+ 100 basis
points shift
in yield
curves 35 (67) (98) 6 (15) (139) (116)
- 100 basis
points shift
in yield
curves (79) 55 106 (5) 15 92 82
The projections assume that rates of all maturities move by
the same amount and, therefore, do not reflect the potential
impact on net interest income of some rates changing while
others remain unchanged. The projections also make other
simplifying assumptions, such as no management action in
response to a change in interest rates.
The average daily revenue earned from market risk-related
treasury activities in 2000, including accrual book net
interest income and funding related to dealing positions was
US$10.0 million (1999: US$8.2 million). The standard
deviation of these daily revenues was US$4.4 million. An
analysis of the frequency distribution of daily revenues
shows that there were no days with negative revenues during
2000. The most frequent result was daily revenue of between
US$11 million and US$12 million, with 27 occurrences. The
highest daily revenue was US$29 million.
14. Segmental analysis
The allocation of earnings reflects the benefit of
shareholders' funds to the extent that these are actually
allocated to businesses in the segment by way of intra-Group
capital and funding structures. Common costs are included in
segments on the basis of the actual recharges made.
Geographical information has been classified by the location
of the principal operations of the subsidiary undertaking, or
in the case of The Hongkong and Shanghai Banking Corporation
Ltd, HSBC Bank plc, CCF, HSBC Bank Middle East and HSBC Bank
USA operations, by the location of the branch responsible for
reporting the results or for advancing the funds. Due to the
nature of the Group structure, the analysis of profits
includes intra-Group items between geographical regions. The
'Rest of Asia-Pacific' geographical segment includes the
Middle East, India and Australasia.
15. Cash basis attributable profit by subsidiary and
line of business
Year ended 31 Dec
Figures in US$m 2000 1999
Hang Seng Bank 1,285 1,071
Less: minority interests (487) (406)
798 665
HSBC Investment Bank Asia Holdings 195 275
The Hongkong and Shanghai Banking
Corporation Ltd and other subsidiaries 2,339 1,369
The Hongkong and Shanghai Banking
Corporation Ltd and subsidiaries 3,332 2,309
HSBC Bank plc excluding CCF 2,163 1,933
Less: preference dividend (76) (76)
2,087 1,857
CCF 143 -
HSBC USA, Inc 743 467
HSBC Bank Middle East 153 78
HSBC Bank Malaysia Berhad 115 (126)
HSBC Bank Canada 116 112
HSBC Latin American operations 183 188
HSBC Holdings sub-group (55) 156
Other commercial banking entities 103 187
UK GAAP adjustments 3 (27)
Less: Investment banking profits
included above^ (586) (303)
Commercial banking 6,337 4,898
Investment banking^ 816 546
Group attributable profit - cash basis 7,153 5,444
Goodwill amortisation (525) (36)
Group attributable profit 6,628 5,408
^ The figure for the year to 31 December 1999 has been
restated to exclude income derived from unit trust related
business, management responsibility for which was transferred
from HSBC Investment Banking on 1 January 2000.
16. Profit and loss account impact from CCF
Year ended Year ended 31 Dec 2000
Figures in US$m 31 Dec 1999 Excluding CCF CCF^ Group
Net interest income 11,990 13,415 308 13,723
Dividend income 157 189 8 197
Fees and commissions (net) 6,017 6,937 374 7,311
Dealing profits 1,299 1,541 85 1,626
Other 1,539 1,639 77 1,716
Other operating income 9,012 10,306 544 10,850
Operating income 21,002 23,721 852 24,573
Operating expenses (11,149) (12,807) (649) (13,456)
Restructuring charges (164) (74) (47) (121)
Goodwill amortisation (36) (339) (171) (510)
Operating profit/(loss)
before provisions 9,653 10,501 (15) 10,486
Provisions for bad and
doubtful debts (2,073) (936) 4 (932)
Provisions for contingent
liabilities and
commitments (143) (72) 1 (71)
Amounts written off fixed
asset investments (28) (34) (2) (36)
Operating profit/(loss) 7,409 9,459 (12) 9,447
Income from joint ventures - (52) 1 (51)
Income from associ
undertakings 123 68 7 75
Gains on disposal of:
- investments 450 287 15 302
- tangible fixed assets - 2 - 2
Profit on ordinary
activities before tax 7,982 9,764 11 9,775
Goodwill amortisation 36 339 186 525
Profit on ordinary
activities before tax
- cash basis 8,018 10,103 197 10,300
^ Period from 4 June 2000 to 27 July 2000 as associate and
28 July 2000 to 31 December 2000 as subsidiary.
17. Differences between UK GAAP and US GAAP
The consolidated financial statements of HSBC are prepared in
accordance with UK GAAP which differs in certain significant
respects from US GAAP. A summary of the significant
differences applicable to HSBC can be found in HSBC's Annual
Report and Accounts for the year ended 31 December 2000.
The following tables summarise the significant adjustments to
consolidated net income and shareholders' equity which would
result from the application of US GAAP:
Net income
Figures in US$m At 31 Dec 2000 At 31 Dec 1999
Attributable profit of
HSBC (UK GAAP) 6,628 5,408
Lease financing (53) (53)
Debt swaps 97 (44)
Shareholders' interest in
long- term assurance
fund (140) (101)
Pension costs (113) (199)
Stock-based compensation (234) (133)
Goodwill (363) (296)
Internal software costs 185 137
Revaluation of property 69 34
Purchase accounting
adjustments 68 130
Accruals accounted derivatives 116 -
Taxation
- US GAAP (8) (20)
- on reconciling items (32) 37
(40) 17
Minority interest in
reconciling items 16 (11)
Estimated net income
(US GAAP) 6,236 4,889
Per share amounts
Amounts on a US GAAP basis
US$ US$
Basic earnings per ordinary share 0.71 0.59
Diluted earnings per ordinary
share 0.70 0.58
Cash earnings per ordinary share 0.80 0.63
Shareholders' equity
Figures in US$m At 31 Dec 2000 At 31 Dec 1999
Shareholders' funds
(UK GAAP) 45,570 33,408
Lease financing (267) (233)
Debt swaps (4) (108)
Shareholders' interest
in long- term
assurance fund (662) (563)
Pension costs (1,151) (1,093)
Goodwill 2,562 3,173
Internal software
costs 313 137
Revaluation of
property (3,044) (2,752)
Purchase accounting
adjustment 198 130
Accruals accounted derivatives 103 -
Fair value adjustment
for securities
available for sale 1,316 736
Own shares held (650) -
Dividend payable 2,627 1,754
Taxation
- US GAAP 737 714
- on reconciling items 119 395
856 1,109
Minority interest in
reconciling items 292 232
Estimated
shareholders'
equity (US GAAP) 48,072 35,930
Total assets
Total assets at 31 December 2000, incorporating
adjustments arising from the application of US GAAP, were
estimated to be US$680.076 million (31 December 1999:
US$574,588 million).
18. Registers of shareholders
The Overseas Branch Register of shareholders in Hong Kong
will be closed for one day, on Friday 16 March 2001. Any
person who has acquired shares registered on the Hong Kong
Branch Register but who has not lodged the share transfer
with the Branch Registrar should do so before 4.00 pm on
Thursday 15 March 2001 in order to receive the dividend.
Any person who has acquired shares registered on the
Principal Register in the United Kingdom but who has not
lodged the share transfer with the Principal Registrar
should do so before 4.00 pm on Friday 16 March 2001 in
order to receive the dividend. Transfers between the
Principal Register and the Branch Register may not be made
while the Branch Register is closed.
Similarly, transfers of American Depositary Shares must be
lodged with the depositary, by noon on Friday 16 March 2001
in order to receive the dividend.
19. Foreign currency amounts
The sterling and Hong Kong dollar equivalent figures in the
consolidated profit and loss account and balance sheet are
for information only. These are translated at the average
rate for the period for the profit and loss account and the
closing rate for the balance sheet as follows:
Period-end 31 Dec 2000 31 Dec 1999
Closing : HK$/US$ 7.800 7.773
: £/US$ 0.670 0.619
Average : HK$/US$ 7.792 7.759
: £/US$ 0.660 0.618
20. Litigation
During 1999 Japanese and US regulatory agencies began
investigating Princeton Global Management Ltd (and related
entities), a customer of Republic's broker dealer subsidiary,
and Princeton's chairman, Martin Armstrong, for his alleged
fraud in selling promissory notes to certain Japanese
entities. Certain of the Japanese entities which allegedly
hold such promissory notes have brought civil actions in the
United States against this broker dealer subsidiary and HSBC
USA, Inc. and HSBC Bank USA (as the successor to Republic New
York Corporation and Republic National Bank of New York,
respectively). At the present time it is not possible to
assess the outcome of the civil proceedings relating to the
Princeton Note Matter. The matter will be defended
vigorously. In addition, in the light of a probable law
enforcement proceeding against Republic's broker dealer
subsidiary in connection with the Princeton Note Matter, a
matter that came to light in 1999 before the acquisition of
Republic New York Corporation, a provision for US$79 million,
the amount of shareholders' equity of the broker dealer subsidiary,
has been taken as part of the goodwill cost of the acquisition.
At the present time, it is not possible to estimate what
additional cost may be incurred as a result of the Princeton
Note Matter. The matter is described in greater detail in the
2000 Annual Report and Accounts.
The Group, through a number of its subsidiary undertakings,
is named in and is defending other legal actions in various
jurisdictions arising from its normal business. No material
adverse impact on the financial position of the Group is
expected to arise from these proceedings.
21. Substantial interests in share capital
No substantial interest, being 10 per cent or more, in the
equity share capital is recorded in the register maintained
under Section 16(1) of the Securities (Disclosure of
Interests) Ordinance.
22. Dealings in HSBC Holdings shares
Between 27 September 2000 and 8 November 2000 Banque Dewaay,
a 75 per cent subsidiary, bought and sold 111,240 HSBC
Holdings plc ordinary shares of US$0.50 each. The aggregate
prices on the London and Paris stock exchanges paid for the shares
purchased were £25,588.56 and EUR2,191,593.27 and the aggregate
prices received for the shares sold were £1,116,344.95 and
EUR349,150.99. Save for this and the dealings by HSBC Investment
Bank plc, trading as an intermediary in the Company's shares in
London, neither the Company nor any subsidiary undertaking has
bought or sold any shares of the Company during the year ended
31 December 2000.
23. Statutory accounts
The information in this news release does not constitute
statutory accounts within the meaning of Section 240 of the
Companies Act 1985 (the Act). The statutory accounts for the
year ended 31 December 2000 will be delivered to the
Registrar of Companies in England and Wales in accordance
with Section 242 of the Act. The auditor has reported on
those accounts; its report was unqualified and did not
contain a statement under Section 237(2) or (3) of the Act.
24. Forward-looking statements
This news release contains certain forward-looking statements
with respect to the financial condition, results of
operations and business of the Group. These forward-looking
statements represent the Group's expectations or beliefs
concerning future events and involve known and unknown risks
and uncertainty that could cause actual results, performance
or events to differ materially from those expressed or
implied in such statements. For example, certain of the
market risk disclosures, some of which are only estimates and
therefore could be materially different from actual results,
are dependent on key model characteristics and assumptions
and are subject to various limitations. Certain statements,
such as those that include the words 'potential', 'value at
risk', 'estimated', and similar expressions or variations on
such expressions may be considered 'forward-looking
statements'.
25. Annual Report and Accounts and Annual Review
The 2000 Annual Review and/or 2000 Annual Report and Accounts
will be mailed to shareholders on or about 26 March 2001.
Copies may be obtained from Group Corporate Affairs, HSBC
Holdings plc, 10 Lower Thames Street, London EC3R 6AE, United
Kingdom; The Hongkong and Shanghai Banking Corporation
Limited, 1 Queen's Road Central, Hong Kong; HSBC Bank USA,
452 Fifth Avenue, New York, New York 10018, USA; Credit
Commercial de France, Direction de la Communication,103
avenue des Champs-Elysees, 75419 Paris Cedex 08, France, or
from the HSBC website - www.hsbc.com.
Chinese translations of the Annual Review and Annual Report
and Accounts may be obtained on request from Central
Registration Hong Kong Limited, Rooms 1901-5, Hopewell
Centre, 183 Queen's Road East, Hong Kong.
A French translation of the Annual Review may be obtained on
request from Credit Commercial de France, Direction de la
Communication,103 avenue des Champs-Elysees, 75419 Paris
Cedex 08, France.
Custodians or nominees that wish to distribute copies of the
Annual Report and Accounts and/or Annual Review to their
clients may request copies for collection by writing to Group
Corporate Affairs at the address given above. Requests must
be received by no later than 5 March 2001.
26. Annual General Meeting
The Annual General Meeting of the Company will be held at the
Barbican Hall, Barbican Centre, London EC2 on Friday 25 May
2001 at 11.00am.
Notice of the meeting will be mailed to shareholders on or
about 26 March 2001.
27. News release
Copies of this news release may be obtained from Group
Corporate Affairs, HSBC Holdings plc, 10 Lower Thames Street,
London EC3R 6AE, United Kingdom; The Hongkong and Shanghai
Banking Corporation Limited, 1 Queen's Road Central, Hong
Kong; HSBC Bank USA, 452 Fifth Avenue, New York, New York
10018, USA; Credit Commercial de France, Direction de la
Communication,103 avenue des Champs-Elysees, 75419 Paris
Cedex 08, France; or from the HSBC website - www.hsbc.com.
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